Success and a High-Trust Culture - Great Place To Work ...

The Business Case for a High-Trust Culture

Executive Summary

Success and a High-Trust Culture

There is a strong connection between a hightrust culture and business success. In fact, the connection is so strong that strategy-minded leaders, who care deeply about the financial well-being of their business, should make building a high-trust culture a top priority.

For more than 30 years, Great Place to Work? has studied and recognized organizations with high-trust cultures, in part through the Best WorkplacesTM lists produced in partnership with Fortune.

For these companies, a defining feature of being recognized as a great workplace is a high level of organization-wide trust, as reported by employees. This research, along with findings from various independent research groups, illustrate that high levels of trust can be a critical strategic advantage for organizations across industries, sizes, and locations.

Several of the compelling business outcomes associated with a hightrust culture include:

Stronger Financial Performance

Comparative Cumulative

Best Companies Provide Nearly

According to independent investment firm FTSE Russell, comparative cumulative stock market returns among the publically-held Fortune 100 Best Companies to Work For? are nearly 3x greater than the market average.

Fortune 100 Best Russell 3000 Russell 1000

Source: FTSE Russell

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The Business Case for a High-Trust Culture

Executive Summary

Stronger Financial Performance

Additional independent research shows the bottom-line benefits associated with a high-trust culture:

An independent study of Fortune 100 Best Companies to Work For? found that great workplaces achieved superior results over a several-year period across metrics including: operating income per employee, operating margin, growth rate, return on assets, and Tobin's Q (the ratio between an asset's market and replacement value).1

Great Place to Work? global research shows that both in the U.S. and internationally, companies with high-trust cultures lead to impressive performance records. For example, a portfolio of India's Best Workplaces outperformed India stock market indices by a factor of nearly four during a recent five-year period (2009-2013).

A four year-research project led by Alex Edmans of the London Business School examined the link between employee well-being and financial performance across the high-trust companies recognized by Great Place to Work? and Fortune.2 Edmans found employee well-being at these companies preceded positive financial performance, rather than the other way around. "The 100 Best Companies to Work For in America delivered stock returns that beat their peers by two to three percent per year over a 26-year period," said Edmans in a TedX Talk on the topic. "Simply put: companies that treat their workers better do better. And this fundamentally changes the way that managers should be thinking about their workers."3

Higher Customer and Patient Satisfaction

At high-trust companies, employees are empowered to make decisions that they believe will serve the customer without undue oversight or bureaucracy, and this ultimately serves the business.

2.8 to 3.2 points higher Customer Satisfaction Rating

An eight-year study of a subset of the Fortune 100 Best Companies to Work For?, published by Cornell University's Industrial and Labor Relations School found that these high-trust companies earn customer satisfaction ratings that are 2.8 to 3.2 points higher than competitors.4

Among the healthcare organizations on the 2016 Fortune 100 Best Companies to Work For? list, Hospital Consumer Assessment of Healthcare Provider and Systems (HCAHPS) patient satisfaction scores average 6.5% higher than the national average for "Overall Hospital Rating", and 9.4% higher for whether patients would "Recommend the Hospital".5

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The Business Case for a High-Trust Culture

Executive Summary

Lower Levels of Voluntary Turnover

100 Best Companies Voluntary Turnover by Industry

Manufacturing & Production Financial Services & Insurance Information Technology Health Care Construction & Real Estate Professional Services Retail Hospitality

2016 100 Best Companies to Work For Industry Average

Sources: "100 Best" data provided by Great Place to Work?. Comparative data provided by BLS. "100 Best" data includes PT & FT turnover; BLS data includes the same in addition to turnover for temp/contract workers.

Each year, the Best Workplaces have substantially lower voluntary turnover than their peers--which can cost companies up to 200% of each exiting employee's base salary. The 2016 Fortune 100 Best Companies to Work For? were no exception, reporting an average voluntary turnover rate of just 10% across employees (national average was 24% over the same period).6

Great Place to Work? research also shows that a high-trust culture is critical to employees across generations. Notably, Millennials who reported their company was a great workplace were 25 times more likely to plan a long-term future with their company, as compared to Millennials who did not believe their company to be a great workplace.7

Trust Benefits Everyone

Trust is Serious Business

The impact of a high-trust culture extends far beyond a company's performance and bottom line. By making a commitment to build trust in your workplace, you are investing in the emotional health and well-being of your employees and in the communities in which you live and work.

If over a third of our lives are spent at work, our businesses ought to be places that accommodate basic human desires for positive relationships. The Best Workplaces make a strong business case for trust. And they show that trust can make for a better kind of business.

Read the full "Business Case for a High-Trust Culture" Report to learn more about its impact on:

Business Performance Consumer Spending Innovation Organizational Agility

Employee Retention Customer and Patient

Satisfaction Employee Engagement Successful Leadership

Download Full Report

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The Business Case for a High-Trust Culture

Executive Summary

About Great Place to Work

Great Place to Work? is a global research and consulting firm that helps businesses become extraordinary by creating high-trust, high-performance cultures. Based on over 30 years of research and data analysis of Best Workplaces, we offer the tools, benchmarks, and methodology to help organizations of all sizes and industries define, measure, improve, and leverage their company culture as a strategic priority.

Our Great Place to Work? Certification ProgramTM and world-renowned Best WorkplacesTM Lists, produced in partnership with Fortune, offer companies of all sizes and industries the opportunity to benchmark and showcase their company culture alongside the best workplaces in the country. We also offer High-Trust Culture Consulting Services, where our expert team of consultants works with you to create a data-driven, customized approach to leveraging your company's unique culture to meet and exceed business goals.

Contact us to learn more:

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U.S. Locations

San Francisco - Headquarters 222 Kearny Street, Suite 800 San Francisco, CA 94108

+1 415 844 2500

New York City 60 Broad Street, Suite 3002 New York, New York 10004

+1 646 370 1125

References

1. Nold, H. "Using knowledge processes to improve performance and promote change: The continuous loop model and cultural enablers." The International Journal of Knowledge, Culture, and Change in Organizations: Annual Review, 12 (2012): 53-70.

2. Edmans, A. "The link between job satisfaction and firm value, with implications for corporate social responsibility." Academy of Management Perspectives, 26.4. (2012): 1-19.

3. Edmans, A. "The social responsibility of business." Online video clip. YouTube. YouTube, 9 July 2015. 21 June 2016.

4. Simon, D. H., and DeVaro, J. "Do the best companies to work for provide better customer satisfaction?" Managerial and Decision Economics, 27. (2006): 667-683.

5. Great Place to Work? 2016 Fortune 100 Best Companies to Work For data and HCAHPS Online April-May 2016 Summary Analysis.

6. Great Place to Work? 2016 Fortune 100 Best Companies to Work For data and United States Bureau of Labor Statistics; Annual quits rates by industry and region, not seasonally adjusted (2011- 2015). 17 March 2016. Web. 21 June 2016.

7. "Three generations: One great workplace." Great Place to Work?. July 2016. Web. 16 Aug 2016.

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